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The Cost of Policy Inaction (COPI) The case of not meeting the 2010 biodiversity target A summary of the Economics, Methods and Lessons Patrick ten Brink Senior Fellow and Head of Brussels Office COPI Deputy project lead & responsible for monetary estimate 17 June 2008 Enveco ptenbrink@ieep.eu www.ieep.eu

Broader Objectives: Context for COPI “Potsdam Initiative – Biological Diversity 2010” 1) The economic significance of the global loss of biological diversity In a global study we will initiate the process of analysing the global economic benefit of biological diversity, the costs of the loss of biodiversity and the failure to take protective measures versus the costs of effective conservation.

Aims and Objectives of COPI Estimate the Cost of Policy Inaction (COPI) - the case of not meeting the 2010 biodiversity target. How much will the loss of ecosystems and biodiversity cost society/the economy? This is a first analysis– sufficiently robust to be useful, but with potential for improvement. It is also an exploration of methodological approaches and needs The COPI focus has primarily been on land-based biomes and associated ecosystem services given model availability Some scoping for other areas and testing of methodological solutions. Part of response to the Biodiversity Communication Action Plan (COM(2006)216; EC, 2006) – to “Strengthen understanding and communication of values of natural capital and of ecosystem services…”.

Approach and Methodological issues Model availability important – OECD/Globio model suitable for land-based biomes showing changes in landuse and quality to 2050. Input Data is key – eg data needed on ecosystem service values in per hectare terms for land-use, biome, geographic region and time (as projection to 2050) Data existence varies / gaps exist; some can be addressed using assumptions and techniques (benefits transfer et al) . Two scenarios used - Partial estimation scenario and Fuller estimation scenario Pragmatic assumptions necessary: the approach assumed a linear relation of value to loss of biodiversity. Yet not some changes are non-linear, there are (critical) thresholds too. Analysis is an analysis of marginal change – loss at the margins and not an estimate of total value of natural capital. Other areas of costs from biodiversity loss – marine, coral reefs, wetlands, IAS – scoped, but not in the main numbers. Final numbers conservative. Analysis focuses on both land-use changes (eg conversion from one land use to another) and quality changes (eg loss in biodiversity)

Valuation and Ecosystem service losses COPI calculation: A Annual Loss of economic value of ecosystem services that would have been Relative to 2000 available had biodiversity remained at 2000 levels. Estimate for 2050. Services that would have been there, had biodiversity been A Ecosystem halted. service level Losses continue into the future 2000 2010 2030 2050

COPI - Some key results • The welfare loss grows with each year of biodiversity and ecosystem loss. • Over the period 2000 to 2010 this amounts to around 50 billion Euros extra loss per year, every year. • By 2010 the welfare losses from the loss of ecosystem services amount to 545 billion EUR in 2010 or just under 1% of world GDP. • The value of the amount lost every year rises, until it is around 275bn EUR/yr in 2050. • The loss of welfare in 2050 from the cumulative loss of ecosystem services between now and then amounts to $14 trillion (10^12) Euros under the fuller estimation scenario • This is equivalent in scale to 7% of projected global GDP for 2050 – across land-based biomes. This is nearer 5.5% for forestry biomes Source: L. Braat & P. ten Brink (eds.) 2008 COPI

Methodological insights for future work Data Gaps – need additional work to fill in gaps, test and improve gap filling approaches Address potential inherent biases in the (application of) economic valuation? eg greater focus & ease of analysis for commodity prices related valuations Work on other services – eg regulating services Non-linearity – integrate non-linear issues (eg critical thresholds) into analysis. Important to look at how to address substitutability (or lack of) Risks and Scientific Uncertainty – also apply risk assessment Spatial perspective – provision of service and benefit from service not always in the same location. Careful treatment is needed. Some costs only have an effect in future generations – discounting important (indeed critical). Ethical issues – anthropocentric approach; equity, fairness – need to be core.

Next Steps Broaden/update to help in wider TEEB • Build on lessons & ensure lessons fully integrated in TEEB phase II • Refine a COPI for land-based biomes in light of efforts to improve data and assumptions. • Broaden COPI to do similar exercise for other biomes • Make efforts to ensure wider set of ecosystem services are covered (equally) • Make links to sectors of the economy (which benefit, which burden et al) • Make greater links to social aspects (well-being, distributional impacts). • Assess role of drivers and policy implications • Use values of benefits (and costs) of ecosystems and biodiversity (loss) to improve the evidence base for decision making.

The Economics of Ecosystems and Biodiversity in National ...

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